MANILA Philippine President Gloria Arroyo, in her first meeting with business leaders since assuming power, vowed Friday to weed out graft, rein in a rocketing budget deficit and spur economic growth, AFP reported.

"I am committed to restoring the cabinet as the institution of executive policymaking and coordination," she said.

"This is the cabinet which meets in the morning and not at midnight," Arroyo said, in a dig at Estrada's alleged policy making during late night drinking and gambling sessions with his close businessmen friends.

The business community in Manila was a key player in the military-led popular uprising that swept ex-president Joseph Estrada from power and installed Arroyo at the helm about two weeks ago.

Arroyo, a U.S.-trained economist, said the new administration's priorities included stemming a ballooning budget deficit which was threatening to derail economic growth in the resource-rich archipelago.

She said she had set up a high-powered panel of experts to slash by 35 percent the projected 2001 budget deficit of 225 billion pesos ($4.5 billion) to a more manageable 146 billion pesos.

"This fiscal target necessarily entails hard work and sacrifice," including reduced spending and even austerity measures, she said in her first major economic policy speech since taking power on January 20.

She said four of her most senior economic aides would form a team to monitor "fiscal prudence" while also ensuring the economy did not go into reverse.

"We can and must do more with less," she added.

Arroyo's budget deficit estimate of 225 billion pesos was nearly double the initial projection of 120 billion pesos.

Her target of 146 billion pesos would bring it closer to last year's deficit of 136.1 billion pesos.

The government wanted to achieve fiscal prudence in the shortest time possible and yet generate enough demand "to create a growth path that will give strength and momentum in the long term."

The Philippine economy soured last year amid a corruption scandal that led to the impeachment of Estrada in the house of representatives.

His corruption trial in the Senate was adjourned abruptly last month, triggering a popular backlash which led to his downfall.

Budget Secretary Alberto Romulo has said the Estrada government had left behind at least 70 billion pesos in unpaid bills from last year.

Arroyo said Friday that she would not compromise in her fight against graft, stressing that her first directive on taking office was to order government officers not to award contracts to her or her husband's relatives "either real, pretended or imaginary."

Her predecessor Estrada was alleged to have built up a network of cronies who purportedly won handsome deals through the back door and evaded massive tax payments.

Arroyo told business leaders that while she would move to rid the government of graft, they should in return pay their taxes promptly.

To speed up the formulation of economic and developmental measures, Arroyo said she would convene a development advisory council on a regular basis.

The council, comprising key cabinet members and legislators, would forge policy consensus and improve coordination of policies and programs between the Executive and Congress.

Arroyo said she had disbanded the powerful Economic Coordination Council comprising cabinet members and business leaders set up by Estrada to give advice on economic and investment issues.

The council, she said, replicated the regular functions of the national economic and development authority, which also played the role of an advisory body.